Vol. 58 No. 10

October 2006

Valery Isaakovich Graifer, Chairman of the Board of Directors, JSC Lukoil

As Chairperson of the Executive Committee of the first SPE Russian Oil and Gas Technical Conference and Exhibition, could you outline the basic aims of the event?

The 2006 SPE Russian Oil and Gas Technical Conference and Exhibition will be a major international event for the upstream oil and gas E&P community. It is being organized by SPE and Spearhead Exhibitions Ltd., the partnership responsible for the Offshore Europe conference in Aberdeen. The conference theme is “Technology for World-Class Resources.” The theme speaks for itself and reflects the wide historical industry perspective, rich intellectual resources, and unique natural resources of Russia. The exhibition held jointly with the conference will be dedicated to innovative and existing technologies as well as to their optimal application to further develop the oil and gas industry of Russia at the world level.

The conference addresses the need for an event that focuses on technology and knowledge exchange and will promote communication among oil and gas industry professionals who will find and produce future energy resources. This event will provide a unique opportunity for all its participants—managers, technical specialists, scientists, and students—to share their experiences and achievements in E&P.

The conference will illustrate the technology needed to extend the resource base. Much more oil and gas will be produced from western Siberia and the Volga-Urals basins, and the development of new oil and gas basins in the Arctic offshore, eastern Siberia, and east Asia will replenish the mineral resources of Russia.

High-quality mineral resources are quite scarce in all the branches of the mining industry; there are many more resources that have relatively lower quality or that are difficult to produce and for which more efficient technologies should be developed. It is the so-called “resources pyramid concept.” Both in Russia and worldwide, the more resources that are produced, the worse their structure gets. In the past, in western Siberia and in the Volga River basin, we used to actively develop Cretaceous and Devonian deposits and had not been actively involved in development of resources of under-gas-cap zones, thin oil-pay fringes, and low-permeability reservoirs. Today, we have to develop the resources of low-permeability reservoirs of the Jurassic and Achim deposits of western Siberia as well as viscous-oil carbonaceous deposits and the resources of Permian deposits of Tatarstan natural bitumen. For Tatarstan and Bashkiria, it is very important to develop bitumen resources, but it is not possible to do it using the open-cut mining method as it is being done in Canada because the strata are deposited deeper and much plowland would be sacrificed. These difficult practical tasks will be solved by today’s generation of engineers and scientists.

Consequently, the aim of our conference is to solve practical tasks; it is not just academic sessions. It is very important to integrate the technological advances of the E&P industry all over the world with the unique resources of Russia to secure the energy future of our planet under the conditions of growing hydrocarbon costs.

What are your hopes for what this event will achieve?

The event will showcase a wide spectrum of Russian technologies and achievements, both current and historical, and the more than 200 plenary, workshop, technical, and poster sessions will cover the whole spectrum of engineering and technological issues.

In the plenary sessions, major company managers will exchange opinions on the role of Russia in the world energy production mix, and the most prominent scientists and specialists will address such issues as the production history of unique and giant oil and gas fields. For young petroleum experts to understand and to feel succession of the generations and time, we have arranged a special session titled “Legends of the Russian Oil Industry” to be held on the last day of the conference.

At technical sessions, experts will discuss the role of technologies in the development and construction of fields, oil-recovery enhancement, and the improvement of economic indicators credited to new technologies, and we will discuss how the industry will evolve. Topics to be covered range from field development in Arctic conditions to production-stimulation issues, and from drilling practices to project management. The fact that we have had to extend the conference sessions to 4 days from the original 3 days shows how fully the international industry has embraced this event. I believe this will be a truly outstanding event.

How important is it to further the exchange of technology and best practices among countries and companies?

It will be important for the conference participants to see that Russia is becoming part of the world’s technology forum. So much technology in use today around the world originally was invented by Russian scientists. Hydraulic fracturing, for example, was first performed in Russia in the early 1950s. The first submersible pump was invented by a Russian engineer. The first multilateral wells were drilled in Bashkiria. These are just some examples.

A lot of these ideas then came back to Russia much refined and improved by the western companies. So some of the best Russian ideas are already used around the world. But there are other ideas and technologies we have in use here in Russia that the world is still unaware of. As for the exchange of technology, it is already happening, but a lot more needs to happen still. And technology needs to be a lot better in some areas.

Many people are starting to realize that Russia is one of the biggest hydrocarbon resource holders in the world. Oil prices, and the world’s energy balance to a considerable extent, depend on how efficiently and fully we develop these resources. I cannot stress strongly enough the importance of this. It is very important in terms of global energy security. We are custodians of a great trust and have to use our resources wisely. So we are very focused on recovery efficiency in the older fields and on the search for new prospective structures and satellite fields.

Russia’s Arctic offshore is a key area of technical interest. Can you discuss the main challenges for the exploration and future development of these often harsh-environment areas? Is there a technology that you believe is vital to the region’s successful exploitation?

It is so vitally important to be environmentally friendly in this area. To have a very good safety record and to design systems to be very safe overall is crucial for companies operating in the Arctic. The technical challenges are many, such as how to find prospective structures and how best to do seismic surveys in areas covered with ice that never melts. Drilling issues are another key area; how to drill from moving ice is one I can mention. Special attention also must be paid to hydrocarbon transportation.

A lot of work has been done in Norway with cold flow and multiphase flow, for example, that has enabled the industry to optimize the product-transportation scheme and to put new fields into operation. But the industry must really focus on designing environmentally safe systems for this area. If I had to pick a crucial technology in this area, I would say it would be subsea completion technology.

Western Siberia is another key area of significance. What advances still need to be made in production enhancement and increasing known and recoverable reserves in many of these brownfield areas?

What we are going to use in western Siberia, and what will help us a great deal in the future, are advanced hydrocarbon-recovery-stimulation technologies. 3D seismic and better reservoir modeling will help us refine our understanding of large fields, and we will be able to better exploit fields with improved sweeping of areas already produced.

I do not expect us to find any more giant fields in this area. But we will be able to find smaller fields, and we will be able to keep production growing by improving recovery efficiency. At present, in certain best strata and fields, oil-recovery efficiency is already 50% and higher. I think—and this is just my estimate—that if we keep doing what we are doing, and the industry keeps developing in the right direction, working over wells and finding missed areas, then the recovery factor will reach 45 to 50% for western Siberia on average.

What do you believe are the most pressing technology gaps to solve? Are there any new or potential technologies that will enable the industry to make a step change in performance?

I think that one significant technology gap we have in western Siberia is that we do not do any exploration deeper than Jurassic rocks. That has happened for different reasons, but exploration has been focused on the Cretaceous and Jurassic layers. Once we solve that problem, we will be able to find new reserves. This is something that oil companies will focus on in the near future, and there is a role to be fulfilled by western service companies and geophysical companies. We must jointly review this issue and come up with solutions.

Russia has some giant oil and gas fields, as do several other countries. What parallels do you see among these major development projects? How can different operators learn from each other’s successes and mistakes?

Large chunks of the world’s production come from giant fields. The purpose of one of the plenary sessions of our conference—Case Studies of Unique Fields—is a look at these giant fields and an examination of how they were developed at different times. Some were developed 70 years ago, others 50 or 40 years ago. We will focus on how technology advances have changed the philosophy of field developments such as these, and we will study what has been done differently on those mature fields with technology advances.

On most of these fields, reserves were added from the time of discovery, with the industry able to continue increasing the reserves because of advances in technology. There are examples of reserves that were discovered but with initial production being insignificant; for example, the Ryabchik layer of the giant Samotlor field. It was only with massive hydraulic-fracturing technology that these reserves became much more actively developed. Offshore, technology advancement is much more important. Our next giant field is going to be offshore, I believe. New technologies are still required to make deepwater production more economical.

The issue of attracting “new blood” to the industry and how best to train the engineers of the future remains an ongoing source of discussion around the world. With a maturing workforce currently in place, what must the Russian oil and gas industry do to ensure that the right individuals are attracted to the industry and retained? What technological skills do you feel will be crucial for them to learn to help develop the next generation of fields?

Many new technologies, as well as the competence and the knowledge of the last decades, reside mainly in the West. However, the inflow of young experts to the oil and gas industry in the West is decreasing. At the same time, there is an ample supply of talent, but it is coming from the East—Russia, China, India, and so on. The process of knowledge and experience transfer will go not only from generation to generation but across the borders of cultures and continents.

Big international companies need to move more in this direction. And I believe that many things are being done in this respect. I was very surprised to hear, for example, that Russian nationals are the second biggest group working at Schlumberger here. I must also stress that we need to work together to keep up and redouble our efforts to communicate to the public that the oil and gas industry is a good industry to work in. It is hard work, but it is also so rewarding and interesting! The oil and gas industry in Russia is respected, I can say this for sure. It has played and continues to play such a significant part in the country’s affairs and wealth.

We should say some words about the role of science and education in personnel training. For the last 10 to 15 years, the quality of research and engineering personnel of companies has been significantly reinforced to a certain extent because of staff drain from research and educational institutes. These experts have found their place in companies and have helped to overcome the trend of production decrease in the mid-1990s. Applied oil science and technology in Russia, to a considerable extent, developed in the institutes and research centers within petroleum companies. In higher-education establishments, the faculty gets older, and, what is even more important, there is a gap between what the students study and the up-to-date practice of the oil industry.

Oil education is popular, and many young people come to petroleum institutes. It is very important for future graduates to be ready to apply the most modern technologies, and to solve the most difficult practical and theoretical problems. The government must participate, and the companies should assist. The role of the state in this case is more important because it is the state that could allocate considerable funds to solve fundamental, long-term problems; companies prefer to finance applied and medium-term tasks. There is a very important positive trend—grants from the President of Russia. Seventeen higher-education establishments, including our high-profile institutes (e.g., St. Petersburg Mining Inst.), have received grants to develop fundamental studies.